September 04, 2008

PROPERTY Sector Key to China Economy?

Morgan Stanley's China Analyst Qing Wang thinks so:

"We believe that the outlook for robust growth in China hinges critically on
the sustainability of investment growth in the property sector. Indeed, it is
hard to justify a positive outlook for the Chinese economy in the next 12-24
months, unless one remains constructive about the role of the property sector as
an engine of growth, particularly in some areas (e.g., Chongqing)."

Wang believes property is not a bubble in China, arguing that China's high house-price-to-income-ratio can be reduced and is not out of line with other so-called developing nations. There is risk however Beijing may restrict the property sector and cause a hard-landing to the economy.

China Property remains a sector to watch...

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